US inflation in September increased by 2.4% over the same period last year, the lowest since the beginning of 2021.
According to the US Bureau of Labor Statistics, in September the country’s consumer price index (CPI) increased by 0.2% compared to the previous month. However, compared to the same period last year, CPI increased by 2.4% – the lowest in more than 3 years.
Excluding frequently fluctuating food and energy prices, September inflation increased by 0.3% over the previous month and 3.3% over the same period last year. This data makes the US Federal Reserve (Fed) confident in reducing interest rates.
Employees stack vegetables in a supermarket in Washington (USA). Image: Reuters
US inflation has continuously cooled down recently, currently far from the peak of 9.1% in mid-2022. Inflation approaching the 2% target has caused the Fed to turn its attention to the labor market, while lowering interest rates. rate of 50 basis points (0.5%) last month.
Economists say inflation in the world’s largest economy is on the right track. Factors that pushed prices up during the pandemic gradually disappeared. Demand is also increasingly returning to normal levels.
Minutes of the September meeting showed that the majority of Fed officials supported starting a period of monetary easing. The Fed has raised interest rates by 525 basis points (5.25%) for the period 2022 – 2023. Last month, the agency reduced interest rates for the first time since 2020, bringing interest rates to 4.75-5%.
The number of new jobs in the world’s largest economy also increased the highest in half a year, according to the US Department of Labor. While the unemployment rate is down to 4.1%.
A vibrant labor market and solid consumption have caused investors to give up hope that the Fed will reduce interest rates by another 50 basis points (0.5%) next month. According to the CME FedWatch interest rate tracker, the market currently forecasts a 76% probability of a 25 basis point cut at the November meeting.